Volkswagen (VW), one of the oldest and the most trusted automakers, hailing from Wolfsburg, Germany, is currently mired in the biggest ever crisis in its history. The scandal, now popularly known as “Dieselgate” may cost the company (as initially estimated in September 2015) 6.5 billion Euros ($7.3 billion), but some experts say it might run as high as 30 billion Euros or a multiple of a VW Group’s entire global profit in 2014.
What exactly went wrongIJ The April 18, 2016, will mark the seven months of the VW diesel scandal that came to light in the US. The VW has deliberately circumvented the US Environmental Protection Agency (EPA) emission laws on its popular “clean diesel” models sold from 2009. It has admitted that the company equipped the control software for its 2.0 litre TDI diesel vehicles with a “defeat device”. This device helps in showing the reduced level of emissions while undergoing tests. The VW diesel scandal revealed through a clean-air group known as the International Council on Clean Transportation (ICCT) which conducted tests on VW diesel cars. The ICCT’s intention was to confirm the VW hypothesis that the latest diesel cars launched by the company complied with all emission requirements and remain far more efficient than the gasoline vehicles of its competing automakers. The ICCT, while conducting the test on VW vehicles in Europe, found that some of its models’ on-road emission level is much higher than those recorded in the lab test. The ICCT decided to conduct the same test on VW diesel vehicles in the US which follows much higher and tougher emission standards Tier 2 (T2) Bin 5 than Euro 5 in force in the European Union (EU). The testing in the US started from a dynamometer or rolling road to the real world on various types of roads from San Diego to Seattle. Finally it was found that the on-road emission levels of VW diesel cars were far higher than what was legally permissible in the US. For example, a VW Jetta TDI and a Passat TDI (with urea treatment) emit Nitrogen Oxide 15-35 times and 5-20 times respectively on open roads in the US. On the other hand, a BMW X5 xDrive 35d diesel car fitted with urea after-treatment was tested around the same time and found that the car met the emission limits under all circumstances in the US.
How did the scandal come to publicIJ It was neither the US EPA nor the US Department of Justice and the California Air Resources Advisory Board (CARB) that discovered the VW diesel scandal. It was all initiated by the ICCT. Once the ICCT testing was done, the EPA and the CARB started a joint investigation on VW cars in May 2014. By December 2014, the company recalled about half a million vehicles to fix the problem, but the CARB found that the issue was not handled properly as the questioned cars failed to come up to the set standards in the US. Only in July 2015, the CARB informed both the EPA and the VW. Afterwards the EPA refused to certify VW’s 2016 TDI cars for sale in the US market as the emission results vary between lab testing and on-road drive. The saddest moment came to VW when on September 3, 2015, the company finally admitted that it flouted the EPA emission regulations by fitting a “defeat device” in its diesel cars. On September 18, the VW came out in public in a six-page letter to the EPA about the using of the defeat software. The company officially responded like this, “Volkswagen Group of America, Inc., Volkswagen AG and Audi AG received today notice from the US Environmental Protection Agency, US Department of Justice, and the California Air Resources Board for an investigation related to certain emissions compliance matters. VW is cooperating with the investigation.” But later in the day, the company issued another statement to add the following information, “Volkswagen is committed to fixing this issue as soon as possible. We want to assure customers and owners of these models that their automobiles are safe to drive, and we are working to develop a remedy that meets emission standards and satisfies our loyal and valued customers. Owners of these vehicles do not need to take any action at this time.” In the meantime, Cynthia Giles, an EPA Enforcement Officer, stated that the cars in question “contained software that turns off emissions controls when driving normally and turns them on when the car is undergoing an emission test”. This was a hard reality for the VW to accept and apologise to all the owners of its diesel vehicles.
In the past, the VW had claimed that it is the only automaker which possessed the expertise to make clean diesel cars without urea injection. Whereas the other automakers use urea injection and some complex emission control systems to meet the permissible limits under the EPA in the US. However, the VW is able to maintain the EPA standards for its small four cylinder TDI cars without urea injection. Once the scandal came out in public, the company fired most of its top management, removed all TDI vehicles in its US webpage and made public that 11 million diesel cars carry the “defeat device”. All the affected models which are fitted with the device are: 2015-2016 Golf TDI, Golf SportWagen TDI, 2015-2016 Audi A3 TDI, 2015-2016 Jetta TDI, Passat TDI, Beetle TDI, 2009-2014 Jetta TDI, Jetta SportWagen TDI, 2010-2013 Golf TDI, 2012-2014 Beetle TDI and 2009-2013 Audi A3 TDI. All these vehicles nearing half-a-million in the US alone had the reputation of having “clean diesel engines” were sold from 2009-2015. Indeed these cars are fitted with the older EA 189 engines but they do not have the Selective Catalytic Reduction (SCR) urea injection system.
With this crisis, VW has witnessed the worst ever damage in its 78-year long history of the company. As the Reuters record that “the scandal has wiped more than a third off Volkswagen’s share price, forced out its longtime chief executive and rocked both global auto markets and the German establishment”. It has badly exposed the laxity in emission regulations across Europe and the invisible hand of auto giants in influencing policy-makers in giving them a free hand while operating these types of shady schemes which finally play a decisive role in the job market. It might be said that the political bosses at the top were keeping quiet and hence, car makers had a free run in flouting serious emission norms at a time when environmental awareness rightly forms a critical component of policy-making across the world, particularly in the advanced European nations. It is also ironical why the scandal had to break out in the US, not in the EU wherein the company’s headquarters are stationed. It definitely shows the role played by the home Government of Germany which should have been more cautious than the way the US Government acted. May be the German Chancellor is too busy these days in fixing the migration problem for which she has been rightly termed as the most indispensable person of Europe. It may be that with the long reputation and trust borne by the VW may have largely hoodwinked the German policy-makers and the rest of Europe who had always thought and believed “the VW would deliver the best of the German engineering to the world”. Alas! The VW has badly sullied its brand image and it would be really difficult for it to make a “clean come back”.
Experts, auto journalists and government officials, including millions of customers simply say that it is just startling, unbelievable and shocking which should have never emerged from one of the top auto giants of the world like the VW. Now the three parties that must come to an agreement are — the EPA, CARB and the VW — for finding a comprehensive regulatory settlement to the American VW customers first and then for the rest of the owners of its maligned vehicles. The owners of all these cars are still clueless about the fate of their prized machines from the largest automaker of Europe.
In a shocking revelation by Germany’s Suddeutsche Zeitung newspaper, which gathered facts from an internal investigation of VW, it stated that the development and the fitting of the defeat device software was an open secret in the company’s engine development department. It was found that the employees in the engine development department were under pressure to find a cost-effective solution to develop clean diesel engines for US market from the top management board. As the inbuilt culture of the company is “we can do everything”, therefore without adhering to the rules, staff members found a solution in making a defeat device to bring out better diesel cars for the US market. Suddeutsche reported that this manipulation started in the company long back in 2006. Further the paper quoted that staff in the engine development department took comfort from the fact that regulators would not be able to detect the fraud using conventional examination techniques. This all, finally brings home the message that the company was not unaware of the scam and a significant branch of it was intentionally doing it to make profit for it. Currently, analysts say it could be a challenge to do the refits in all the affected vehicles without warranting costlier maintenance, and this might end up VW facing thousands of lawsuits against the company. Many of the VW fans and auto experts now feel that its time to say goodbye to the company’s popular tag line “Dus Auto” meaning “The car” which was launched in the Franfurt Auto Show in 2007. The idea behind the catchline which replaced the earlier one “Aus liebe zum Automobil” was to inspire people saying “VW when they want to say car”. For the interest of the commoners and millions of its customers, the company must bring back the real “Dus Auto” minus the “defeat device”.
(The writer is an independent political analyst based in Delhi)